By Clara Nwachukwu
To cushion the effects of the impending hike in electricity tariff, the Federal Government has agreed to pay about N100 billion in subsidy over the next two years under the second phase of the Multi Year tariff Order, MYTO 2.

The subsidy will be paid at the rate of N50billion in the 2012 financial year, and another N50billion in 2013, and thereafter cease to pay anymore electricity subsidy, as it is anticipated that as time goes by, more power will be available, and less need for subsidy.

Parts of the mitigating measures also include the distribution of meters and electricity bulbs for free to consumers.

The Chairman, Nigerian Electricity Regulatory Commission, NERC, Dr. Sam Amadi, disclosed this to journalists at the weekend in Lagos, while explaining some facts about the new tariff, which becomes effective from June 1.

He said that the subsidy for 2012 is only applicable to specific consumers categorised as R1, R2 and C1, which include the lifeline consumers, the majority of other consumers and the small and medium enterprises, SMEs respectively.

New tariff

Amadi argued that the tariff is structured to attain cost reflective pricing that will ensure private sector investment in the generation, distribution and transmission of electric power in Nigeria.

He clarified further, “Under the new tariff regime, different classes of consumers will pay different rates applicable to their classes for their electricity supply. Low income earners who use less electricity will pay less than high income earners who consume more electricity.”

Accordingly, the R1 consumers will pay N4 per kilowatt hour, Kwh; while R2 and C1 will pay between N11 and N12/Kwh, instead of an average of about N24/Kwh.

Amadi further explained that the R1 customers are paying much less because they “will enjoy the special benefit of not paying a fixed charge for their electricity,” as well as the removal of maintenance charge for ll classes of consumers.

In spite of the slight increases, the NERC boss argued that electricity tariff in Nigeria remains one of the lowest in the African continent compared with other countries such as Ghana N24/Kwh; Benin N24; and Chad N27.

Free meters, bulbs

Under the new structure, consumers are not expected to pay for meters, be it the analog or pre-payment meters because “this cost has been included in their tariff,” Amadi stressed, adding that “they only have to pay a minimal fee for connection which is approved by NERC.”

He said that all the distribution companies, DISCos, within the next 12 to 18 months are expected to distribute meters to all classes of customers to reduce the incidence of estimated billings and resultant crazy bills.

“Before the commencement of the new tariff, all distribution companies will submit their meter installation plan to NERC in order to receive the meter component of the tariff. This will address the perennial billing fraud suffered by many consumers through estimated billing,” he said.

Furthermore, he said that a methodology to ensure accuracy of estimated billing is being designed by NERC to further protect the rights of customers and prevent overbilling while estimated billing is being phased out.

For decades, many electricity consumers have been without meters either analog or prepaid, and even where meters exist, the DISCOs prefer to estimated billings rather than reading the accurate consumption level from the meters, such that consumers have had to pay for energy not consumed or utilised.